Trump’s Trade Advisers Finalize Plans for Reciprocal Tariffs Amid Growing Trade War Concerns
Former U.S. President Donald Trump’s trade advisers are in the final stages of preparing reciprocal tariffs, which could soon be imposed on all countries that charge duties on U.S. imports. This move is set to heighten tensions in the ongoing global trade conflict, with fears mounting that it will escalate into a wider trade war. Trump had announced on Monday that tariffs would be imposed on steel and aluminum imports starting March 12, which quickly drew backlash from countries like Mexico, Canada, the European Union, Japan, and Australia, many of whom are seeking exemptions. The decision has disrupted markets and sent industries dependent on steel and aluminum scrambling to adjust to rising costs.
The announcement of these tariffs comes on the heels of Trump’s decision to impose a 10% tariff on Chinese goods, effective February 4, with countermeasures from China already beginning. Trump has also delayed the imposition of a 25% tariff on goods from Mexico and Canada for another month to allow further negotiations over border security and efforts to combat drug trafficking. Despite some U.S. workers welcoming the tariffs, many manufacturers are concerned about the cascading effects on their businesses, particularly in industries heavily reliant on the metals involved.
While the White House has remained tight-lipped about the specifics of the reciprocal tariffs, Trump has signaled that they will target all nations imposing duties on U.S. goods, with the possibility of additional tariffs on sectors like automobiles, semiconductors, and pharmaceuticals. Trade experts have noted that structuring the reciprocal tariffs presents significant challenges, as it would involve tailoring tariffs to match the rates imposed by various countries, each with different duty schedules. As of now, details about how this plan will be executed remain unclear, though an announcement could come as soon as Wednesday.
Experts warn that implementing reciprocal tariffs could become an enormous and complex task. With over 186 members of the World Customs Organization, each with their own tariff structures, creating a matching tariff system for the U.S. could prove impractical. One trade expert compared the project to something that could require advanced technology, like artificial intelligence, to manage the 5,000 product categories across hundreds of countries. In addition, trade specialists have pointed out that Trump’s team could face legal hurdles, as existing laws like the Trade Act of 1974 and the Tariff Act of 1930 may limit the scope and effectiveness of such tariffs.
Although the reciprocal tariffs might provide a sense of leverage in trade negotiations, some analysts argue that they could have unintended consequences. For instance, matching high tariffs from countries like Colombia, which imposes high tariffs on coffee to protect its own coffee industry, could end up hurting U.S. consumers rather than benefiting U.S. industries. The uncertainty surrounding the implementation and consequences of these tariffs leaves many businesses and governments wary of the future trajectory of U.S. trade policy.
Source: Reuters